Volume developer sounds alarm in trading update
Housebuilder Persimmon has said that its overheads will reduce by around 700, as it warns of a “highly uncertain” market.
However, in a trading update covering 01 July to 06 November, the firm also saw an improvement in its private sales rate over the past five weeks, at 0.59 sales per outlet per week against 0.45 in 2022.
The developer is set to deliver around 9,500 homes in 2023 – a sharp fall against 14,868 in 2022.
While the near term is likely to remain challenging and we remain disciplined on costs, we continue to position the business for growth when the market recovers, as demonstrated by our further progress on planning in the period.
Dean Finch, Group CEO, Persimmon
Meanwhile, Redrow has reported a “subdued” market, with rising cancellation rates of 25% (2022: 22%) and a weekly net reservation rate of 0.36 in the 18 weeks to 03 November 2023.
The developer’s average selling price was -2.5% lower than the same period last year, at £471,000 (2022: £483,000).
Following the usual summer slowdown we reported in our 2023 results announcement, the housing market has remained subdued through the Autumn.
The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs.
Richard Akers, Chairman, Redrow
However, Taylor Wimpey announced that operating profit for its full year will be at the “top end” of its previous forecast of £440m to £470m.
In a trading update on its performance since half year, the developer referenced “significant market uncertainty” but reported a net private sales rate of 0.51; the same as the equivalent period in 2022.
The firm expects completions this year to fall between 10,000 and 10,500 homes, a reduction on the 14,154 completions in 2022.
Taylor Wimpey has delivered a resilient performance in what continues to be a challenging market backdrop, reporting a robust sales rate and strong financial position, and reiterating our full year 2023 UK volume guidance in the range of 10,000 to 10,500 homes.
Jennie Daly, CEO, Taylor Wimpey
Finally, Vistry have announced a record partnerships deal with Leaf Living and Sage Homes to build nearly 3,000 private rental and affordable rental homes.
The 2,915 units have a gross development value of £819m, as the group continues its strategy to merge housebuilding operations into its partnerships arm.
Through our unique Partnerships model, Vistry is maintaining the momentum of delivery of much needed affordable housing across the UK.
Greg Fitzgerald, CEO, Vistry
House prices rise in October
The Halifax house price index for October has revealed a 1.1% rise in property values in the month – the first rise following six consecutive months of falls.
Property values fell by -3.2% over the year, compared to -4.5% in September, with a typical UK property now costing £281,974.
All UK nations and regions saw house prices decline on an annual basis, with South East England experiencing the greatest fall at -6.0%.
Scotland’s annual house price was the most resilient, down just -0.2% over the year.
Industry disappointment as the King’s Speech offers little
The inaugural King’s Speech has left the housebuilding industry underwhelmed, with no new legislation announced to tackle nutrient neutrality.
Instead, the only major industry announcement was a bill to “reform the housing market by making it cheaper and easier for leaseholders to purchase their freehold and tackling the exploitation of millions of home owners through punitive service charges”.
Housing professionals were left disappointed by the lack of meaningful legislation.
Lawrence Turner, Director of planning consultancy Boyer, as saying: “Only last month, Michael Gove told the Conservative party that he wanted the [nutrient neutrality] rules to be scrapped ‘at the first available opportunity’ and so it is extremely disappointing that this opportunity has now been lost. The continued uncertainty will continue to the detriment of those most in need.”
We continue to await greater clarity as to how the government will address ongoing challenges within the planning system, including as a result of current rules around nutrient neutrality and the removal of targets from local authorities.
Mark Knight, CEO, Gleeson Homes
Federation of Master Builders Chief Executive Brian Berry said: “It is disappointing that there was nothing of note in the King’s Speech to address the alarming decline in housebuilding rates across the country or any new plans to improve the nation’s draughty and leaky homes.”
Meanwhile, a Labour think tank has called upon the Labour party to introduce a British Homes Act, should they rise to power in the General Election.
The proposed bill will deliver “extensive reform to the planning system”, and suggests that the Government creates GB Homes, a master-planner which would develop “a national strategy for homebuilding and work with regions and local authorities to develop plans.”
The Housing Forum has also lamented the UK planning system this week, stating that it is “not working as well as it should be”.
In a new report entitled Streamlining Planning to Build More Homes, the cross-sector housing body sets out a roadmap for how the planning system can be improved, and presents solutions in three areas:
- Building support for new housing and harnessing the benefits of planning;
- Reducing burdens and improving efficiency;
- Addressing staff shortages and improving skills.
New home registrations fall in Q3, whilst subcontractors cut prices
The National House Building Council (NHBC) has revealed that housebuilding has fallen to the lowest level since Covid, with new home registrations falling by -53% in Q3 2023 when compared to the same period in 2022.
Private sector new home registrations fell from July to September by -57%, with 13,429 new homes registered. In 2022, 31,334 new homes were registered over the same period.
The building warranty provider also noted a -70% plummet in the number of new-build bungalows registered, at only 228 units – the lowest figure recorded in NHBC’s history.
It is too early to say the bungalow is extinct.
Steve Wood, CEO, NHBC
What we can see is they are certainly on the critically endangered list with economic and land pressures as well as changes in consumer demand contributing to a decline in their construction.
Bungalows can be a more expensive option for both developers and buyers compared to two-storey homes.
Meanwhile, the latest S&P Global / CIPS UK construction Purchasing Managers’ Index has revealed that subcontractors were cutting prices for the first time in over three years in reaction to falling demand.
Survey respondents referenced a lack of tender opportunities and longer decision-making amongst clients, amidst a gloomy economic outlook.
The index registered 45.6 in October; a slight increase from 45.0 in September, but still the second-lowest reading since May 2020. Any figure below 50 indicates a contraction in the market.
Housebuilding decreased for the eleventh successive month, registering 38.5.
Meanwhile, official figures from the Office for National Statistics have revealed that – despite an overall increase of 0.4% in construction output during September – new build housing fell by -0.19% in the month.
Private new-build housing also fell by -0.56% from July to September, whilst overall construction output increased by 0.1% in the quarter.
Housing View 